The Bombay Stock Exchange has decided to revise the free-float adjustment factor (FFF) of 39 stocks in various indices. The revision is part of the quarterly review of the index constituents based on the shareholding pattern filed for the quarter ended September 2010.

Power Grid Corporation’s FFF has been revised to 0.35 from 0.15 earlier. The stock is a constituent of the BSE-100, BSE-200, BSE-500 and BSE Power indices. Pipavav Shipyard’s FFF has been revised to 0.20 from 0.25. The stock is a constituent of BSE-500, BSE IPO and BSE Mid-cap indices. Cox & Kings’ FFF has been revised to 0.35 from 0.30. Cox & Kings is a constituent of BSE-500, BSE IPO and BSE Mid-cap indices.

Similarly, SpiceJet’s FFF has been revised to 0.65 from 0.85. The stock is a constituent of the BSE-500 and BSE Mid-cap indices. KS Oils’ FFF has been revised to 0.60 from 0.50. The stock is a constituent of BSE-500 and BSE Mid-cap indices. Ansal Properties & Infrastructure, which is a constituent of BSE-500 and BSE Small-cap indices, has been revised to 0.45 from 0.40 earlier. The FFF of Panacea Biotec, a constituent of BSE-500 and BSE Small-cap indices, has been revised to 0.30 from 0.35.

The revised free-float adjustment factors would come into effect from 29 November 2010.

Real estate valuations are opaque and the government had openly supported the sector after the financial crisis. The current real estate scam is the outcome of these two factors, say experts

The arrest of eight officials from public sector banks and financial companies for allegedly taking bribes to sanction loans to realty firms, has drawn attention to one of the key factors that has led to this real estate scam: Opaque valuation methods that allow artificially high valuation of properties, making it possible to go for such improper loans.

"It's not just a matter of involvement of public sector banks or mediators; the system of real estate valuations is the crux of the scam," said Pankaj Kapoor, CEO & founder of Liases Foras, a real estate rating and research firm. "I think the Central Bureau of Investigation (CBI) got involved in the matter because there could be risky securities on which loans have been given. For instance, a property which should have a value of Rs150 crore is being projected as worth Rs500 crore. That becomes the security on which a bank gives loans and is where the risk comes in," Mr Kapoor told Moneylife. The real estate sector is the least transparent of the large business sectors. Developers are always keen to get huge finances on artificial valuations on their properties as the industry is unregulated.

Officers in the top management and middle management of Bank of India (BoI), Central Bank of India (CBoI), Punjab National Bank (PNB), Life Insurance Corporation of India (LIC) and LIC Housing Finance were receiving illegal gratification through a private financial services company, acting as mediator and facilitator for corporate loans and other facilities from these institutions, the CBI said in a statement.

"As of now, the name of only one arranger (of the loans) has come out, but I think there would be small and big arrangers in the industry," Mr Kapoor said.

Being an unorganised and unregulated industry, not just big but small developers too in major cities try to value property rates to their advantage. It is left to diligent banking officials to give loans against valuations that are realisitic. "There were pressures on the PSU banks to give more and more loans to developers," explained Mr Kapoor.

As a fall-out of the LIC Housing scam "there will be repercussions in terms of increased caution by banks in lending to developers. Borrowing will become more expensive and the process involved in getting loans will get lengthier as banks increase their vigilance levels. This means that we may see a marginal increase in the dependence on private equity," said Anuj Puri, chairman and country head, Jones Lang LaSalle India.

Experts have been expecting a sharp fall in property rates since last year, when other industries were crippled in the recession; but property rates did not come down significantly as developers continued to get funds from financial institutions.

"In the period of the recession, when real estate prices had to come down significantly, why did the government ask PSU banks to give loans to the real estate sector? Now we are suffering the effects of that decision. This year we have crossed another peak in real estate rates because the government allowed further infusion of funds in the real estate industry," Mr Kapoor said.

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COMMENTS

Ashu

6 years ago

Real Estate Prices are notional can be anything. More than 50% black money is involved in financing the project. With the availability of easy fonds builders & investors are able to maintain unviable high prices. I have seen the small brokers do liasion between PSU /Private Banks & loan seekers and take hefty commission in arranging loans. They may be passing high bribe to bank officials. Present Govt. should work for abolishing the speculation in real estate prices .

Vikas

6 years ago

Evry news these days is sounding so negative, include "barkhagate" and so many scams since 2009 satyam scam, therefore, I have a plea. Atleast, those of us who are concerned about the negativity, should post not just the news but end it with some suggestion/idea/solution. We should all convert to problem solvers rather than complainers. Sure, we may not stand in the next election, but there would be ways to conquer. Please also post some more positive articles along with the negetive ones. Thanks

Roopsingh

In Reply to Vikas6 years ago

dear Mr Vikas,
i agree to your point that we should become problem solvers and not complainers-
my suggestion is that HANG ALL CORRUPT POLITICIANS AND TOP LEVEL BEUROCRATS FIRST IN PUBLIC PLACES TO GIVE A LESSON TO NEXT GENERATION OF CORRUPT PEOPLE WHO WILL GET A GOOD LESSON LOOKING TO THOSE DEAD BODIES HANGING IN OPEN-THATS MY SUGGESTION AND ONLY OPTION I SEE TO STOP THESE NEGATIVE NEWS

PCChacko

6 years ago

Real estate prices have gone up to the sky.This is because of availability of money for the buyers through housing loans without proper controls Maximum loan should be with in 75% of teh property and there must be ceiling of prices according tothe place and situation of the property rther than accepting the inflated price quoted by the builders If supply of loan and acceptance of price is limited prices will definitely reduced by 40% from current level

Shibaji Dash

6 years ago

With a virtually perennial dysfunctional legislature. the country is bereft of any effective forum to press on the Govt the most pertinent question raised in the last para of the commentary of Moneylife Digital team.Thank you Moneylife.

Rohtak (Haryana): India today ushered in Mobile Number Portability (MNP) that will allow cellphone users to switch operators without changing numbers, with telecom minister Kapil Sibal launching the service in Haryana, reports PTI.

The rest of India would get to use MNP from 20th January, next year.

The consumer friendly service was mooted over two years ago and was planned to be implemented by end of 2009. However, the implementation had to be deferred several times owing to reasons ranging from lack of preparedness of operators to delay in appointment of an agency to oversee MNP execution.

MNP would bring in a much-required change in the quality of services as well as attitude of the operators towards redressal of grievances in order to retain subscribers.

As per the eligibility criteria, there should not be any outstanding payment by way of pending bills before customers can apply for availing of MNP services, the Department of Telecom (DoT) said.

It also said that the mobile number sought to be ported should not be sub-judice and also there should not be pending request for change of ownership of the mobile number.

The DoT has claimed that the entire process of switching operators would take a maximum of seven days and subscribers may face disruption of services for about two hours during that period.

The one-time charge that needs to be paid by subscribers would depend on operator-to-operator, but the charge cannot exceed Rs19.

Any mobile subscriber must have used the number for at least 90 days before availing of MNP service.

India has more than 700 million subscribers across the country with nearly 10 operators in each circle.